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Managing Your Tax Season, 3rd Edition


Is tax season at your firm a head-long scramble to the finish line? Do you want to start your next tax season with a system that reflects thoughtful planning and training?

Get fresh insight into tax preparation--and very likely result in significant improvements to your current system. You will learn to analyze your existing tax season system and target problems so that work will be more efficient, errors will decrease, and personnel, including you, will feel less stressed. Most importantly, a well-run tax season will make your clients happier and more loyal.

Every firm has a tax season system, whether documented or not. Tax season management expert Edward Mendlowitz shares specific ideas for improving each aspect of your system, including how to

  • Staff creatively with seasonal staff, interns, and by outsourcing
  • Maximize the effectivness of the tax organizers you send to clients
  • Communicate effectively with clients about the value of your service
  • Use pre-year-end planning to develop tax and financial planning opportunities
  • Empower your preparers to do more return work
  • Make reviews run smoothly
  • Conduct a post-tax season assessment of your process
  • Bill for the real value of your return preparation--and even increase your fees

Numerous sample checklists, letters, charts, and Excel tax comparison worksheets will help you implement this guidance in your next tax season. Having a world-class tax department is possible for every firm, and this resource will help you make that goal a reality.

Topics Discussed:

  • Improving tax season system
  • Tax return preparation processes
  • Managing seasonality issues
  • Staffing solutions
  • Getting the most out of technology
  • Year-end planning for tax clients
  • Staff tax training program
  • Assignment scheduling
  • Client appointments
  • Preparation and review
  • Billing
  • Determining fees
  • E-filing
  • Extensions
  • Tax auditsClient satisfaction, retention and referrals

Edward Mendlowitz, CPA/PFS/ABV/CFF/CITP, CGMA is a partner emeritus in the CPA firm WithumSmith+Brown, located in New Brunswick, NJ. His practice management techniques have been covered by many publications, including The Wall Street Journal and Journal of Accountancy. He has authored 24 books, written hundreds of articles, and written and presented more than 200 continuing education programs for CPAs. He is also a consultant to a number of CPA firms.


Section 1

Chapter 1-- Firm Preparation: Firm Retrospective and Business Model 7

Structure 8

Processes 9

Tax Return and Financial Statement Review Notes 10

Tax Notices 10

Types of Changes 11

Why Checklists are Critical 12

Checklists 13

Zero Tolerance 14

Smaller Firms 14

Chapter 2-- Consider Options for Managing Seasonality 17

Extensions 18

Seasonal Staff 19

Telecommuters 19

Outsource 20

Technology 23

Designated Time for Individual Tax Returns 23

New Clients and Latecomers 24

Existing Clients 25

Chapter 3-- Leveraging Technology 27

Using Software to Its Fullest 27

Peer-to-Peer 32

Update Handbooks, Forms, Services, and Software 32

Research Materials--Finding a Quick Answer 34

Websites to Search 37

Chapter 4-- Complete Pre-Year-End Planning for Select Clients 39

Tax Projections Review 39

Line-By-Line Review 44

Unprotected Estimates Review 44

Cross-Sell Opportunities 46

Chapter 5--Complete Mailings to Clients 51

Mailings 51

Pre-Year-End Newsletter 52

Tax Organizers 59

Tax Notice Service Letter 95

Privacy Notification 98

Consent to Disclosure of Tax Return Information 98

Chapter 6-- Implement a Staff Tax Training Program 101

The Pre-Tax-Season Meeting 101

OTJ Training 102

Maintaining Morale 105

Effectively Training New Employees 105

Staff Loyalty 107

Chapter 7-- Prepare a Preliminary Assignment Schedule 109

Software Used to Create Schedules 115

How the Schedule Will Be Tracked 115

Setting Priorities 116

Time Needed to Complete a Return 116

Chapter 8-- Review Staff Arrangements and Responsibilities 119

Accountability and Control 120

Using Personnel Effectively 120

Effectively Using Your Main Resource 124

Chapter 9--Maximizing Tax Season Efficiency 127

Section 2

Chapter 10-- Return Preparation--Overview and Introduction to Tax Comparison Worksheets 133

Excel Tax Comparison Worksheets as a Review, Training, Planning, and User-Friendly Tool 134

The Tool Described 134

Using the Excel Worksheets in the Review Process 136

Using the Excel Worksheets for Training 137

Planning 137

Cross-Selling Opportunities 138

Notice to Skeptics 138

Sample Excel Worksheets 139

Chapter 11-- Make Appointments with Clients 153

Receive Information From Clients 154

Tax Return Interview 154

Mail-In Clients 154

Engagement Letters 155

Organize the Information and the File 157

Nonpaperless Filing Procedures 158

Paperless Procedures 160

Paperless Outsource Alternative 163

Controlling Paperless Systems 164

Bookmarking 164

Standard Bookmarking for 1040s 165

Call to Becoming Paperless 166

Chapter 12--Prepare the Return 167

Procedures 167

Working Paper Procedures 167

Administrative Procedures 169

Pro Forma Procedures 171

Projection Procedures 171

Chapter 13--Review the Return 183

Methods to Reduce Review Time 183

Who Should Conduct the Review? 186

Content Versus Issue Review 188

Review Procedures Equal Quality Control 189

How Effective Self-Reviews Improve Efficiency 192

Checklist for the Reviewer 194

Administrative Procedures 195

Chapter 14--Prepare the Bill 197

Sending the Return and Bill 197

Sample Bill for a Tax Return and Additional Services 199

Chapter 15--E-File Appropriate Returns 201

Last Minute Procedures 202

Chapter 16--Process Extensions 207

Chapter 17--Assist with Tax Audits 219

Section 3

Chapter 18-- Client Satisfaction, Retention, and Referrals: Measure of Tax Return Client Satisfaction 229

What Clients Get Is Part of Your Brand 229

Quality Control Client Survey 230

WOW! Your Clients 237

Keeping in Touch With Clients 238

How Did You Do? 243

Client Loyalty and Responsibility 252

Chapter 19--How to Determine Your Fees 255

Two Letters to Send to Clients 259

The Danger of Raising Fees 263

Minimum Fee Schedule 263

Official IRS Instructions Booklets 269

Increasing Tax Return Fees 269

Accounting Fees 270

Chapter 20--Expectation Gap 273

The Difference Between What You and Your Clients Expect 273

What Clients Expect 274

What We Expect 275

Chapter 21-- Introducing Tax Clients to Additional Services 279

Using Your Tax Work to Expand Your Practice 279

Upgrade Your Tax Clients 280

Types of Additional Services 281

Ways to Make Clients Aware of Your Capabilities 282

Cross-Selling 285

AICPA Standards in Personal Financial Planning Services 286

Chapter 22--Costs of Preparing a Tax Return 299

Worksheet to Calculate Your Costs 299

Greatest Cost Items 301

Marketing or Practice Development Costs 302

Family Tree of a Small Tax Client 305

Chapter 23-- Some Best Practices for a Better Tax Season 307

Chapter 24-- It’s Supposed to Get Better 309

Afterword 311

I Know You Won’t Believe This, But It’s True . . . 311